California has some of the highest property prices in the United States, and this can often be intimidating for first-time home buyers. Established in 1975, the California Housing Finance Agency (CalFHA) was created to support renters and homebuyers by offering financing programs that serve low to moderate-income Californians. These programs provide financing solutions and down payment assistance to first-time homebuyers in California.
What is the CalHFA Program, and how can it help you? What are the CalHFA guidelines, and do you qualify?
CalHFA Home Loan Programs
The CalHFA offers a wide range of first-time homebuyer loan programs that work for both conventional and government-issued loans. They provide access to fixed-rate loans and the options to roll in down payment and closing cost assistance. In addition to traditional borrower requirements, the CalHFA programs require additional requirements that borrowers must meet. These include:
- A minimum credit score of 660
- A debt-to-income ratio below 45%
- Must meet specific income requirements based on your location in California
- Must be a first-time homebuyer (this means no homeownership within the last 3 years)
- Must be a U.S. citizen, permanent resident, or qualified alien
- Attend a home buying counseling course and provide a certificate of completion
In addition, the CalHFA programs have requirements when it comes to the property you are looking to purchase. These can include:
- Sales price must be less than $970,800
- Property must be located in California
- Property must be used as a primary residence
- Property must be a single-family home, though some condos and manufactured homes may be considered
- No land trusts or leaseholds
Once these requirements are met, there are different programs under CalHFA that you may be eligible for. Here we take a closer look at each one.
CalHFA Conventional Mortgage
This program is a first mortgage loan insured through private mortgage insurance on the conventional market. These loans offer a fixed-rate mortgage throughout a 30-year term. The program uses Fannie Mae’s HomeReady underwriting guidelines and offers lower down payments and closing costs. This can be used with the MyHome Assistance program discussed below.
CalPLUS Conventional Mortgage with ZIP
The CalPLUS conventional mortgage offers a slightly higher interest rate on a conventional 30-year fixed mortgage. However, first-time homebuyers can take advantage of the MyHome Assistance program and the Zero Interest Program, or ZIP for closing costs. The ZIP program is a deferred payment, zero-interest second mortgage only available with the CalPLUS Program. With these additional programs, borrowers have access to money that will assist with the down payment and cover all the closing costs, making homeownership easier for low to moderate-income families that cannot come up with a substantial amount of funds at closing.
CalHFA FHA Mortgage
The CalHFA FHA mortgage program offers a 30-year fixed low-interest rate mortgage insured by the Federal Housing Administration. To qualify for this option, you must meet specific borrowing and property requirements put in place by the FHA. Borrowers can also choose to add the MyHome Assistance program to help cover the down payment and closing costs.
CalPLUS FHA Mortgage with ZIP
The CalPLUS FHA with ZIP offers a 30-year fixed-rate mortgage that can be combined with the ZIP program to help cover closing costs. First-time buyers can also take advantage of the MyHome Assistance program to add additional funds toward the down payment and closing costs.
CalHFA Energy Efficient Mortgage
The CalHFA Energy Efficient Mortgage combines the CalHFA FHA loan with an EEM Grant that allows for energy-efficient improvements over and above the maximum FHA loan limit. This grant is for up to 4% of the initial loan and is only available in this program.
CalHFA VA Loans
This loan program provides a VA-insured 30-year fixed interest first mortgage. To qualify, you must meet the VA requirements and the requirements for CalHFA. This can also be combined with the MyHome Assistance Program detailed below.
CalHFA MyHome Assistance Program
CalHFA’s MyHome Assistance Program is a deferred-payment secondary loan that provides borrowers with a loan equaling 3% of the purchase price (conventional loan) up to 3.5% for an FHA or government loan. This loan is designed to home borrowers pay towards down payments and closing costs.
Helping you navigate the CalHFA Programs
At first glance, all these different available assistance programs can be overwhelming for first-time home buyers. At Hero Home Programs, we understand the frustration that comes with the home buying process, and we are committed to helping ensure everyone can achieve home ownership. At Hero Home Programs, we work with borrowers to help them find the best loan options and assistance programs available and walk them through the home loan process. Talk to us today if you want to learn more about how the experts at Hero Home Programs can help you get into the home of your dreams.